Largest US fintech advocating agency may be divested and fintech industry affected

30 December 2016

The most influential authority in the US regulating and promoting the fintech across the nation the US Consumer Finance Protection Bureau (CFPB) may see its powers and independence in decision making abrogated as its opponents and lawmakers are seeking to take it under stricter control of the US government.

The body has a host of challenges to clean up through as the new US President’s transition administration has launched an investigation in to the agency’s performance, and, besides, it is still a participant in the legal dispute questioning the constitutionality of its organizational arrangement. Defeat of the agency would mean critical changes for the fintech industry development in the United States, and its Project Catalyst initiative in particular.

Trump’s administration pushes the proposals to reduce the powers of the CFPB and provide control over its budget to the Congress with the power to dismiss its head assigned to the US President. This, according to some analysts, would affect the fintech industry, as it would result in preventing the agency’s actions to implement its own initiatives in the sector.

The agency come to the hostile attitude on the part of its opponents for the measures taken by its head Richard Cordray, as the CFPB aggressively applied the new regulation to scrutinize and control the financial practices deemed detrimental to consumers. During this year the agency adopted the stricter regulations for prepaid cards and payday loans. In October the panel of judges took the side of the agency’s opponents, but appeal of the CFPB was supported last week and now the case will be considered by a broader panel of lawmakers.

The agency is deemed as the most influential in terms of shaping the friendly environment for the fintech industry and the changes in its organizational structure may slow down the development of the whole sector in the US.